Classification of Businesses:
on the basis of rules and regulations laid by state and central government.
Registered Business (Registration rules remain the same throughout the country, rules laid by central government)
Unregistered Business (Registration rules may change from state to state, rules laid by the respective state government )
Registered Business:
These are the businesses that are registered under rules laid by the central government (Companies Act 2013 or LLP Act 2008). The rules and regulation for these businesses remain the same throughout the country and does not change from state to state. The businesses that can be registered under Companies / LLP Act are:
- IFSC Company
- Nidhi Company
- Section 8 Company
- Producer Company
- Unlimited Company
- Public Limited Company
- Private Limited Company
- One Person Company (OPC)
- LLP (Limited Liability Partnership)
- Part I (LLP to Company / Firm to Company / Section 8 Company)
These Business entities are registered with MCA/ROC (Ministry of Corporate Affairs/ Registrar of Companies).
Unregistered Business:
These are the businesses that are registered under rules laid by the respective state government. The rules and regulations for these businesses may or may not remain the same from one state to another. The businesses that can be registered under State Government rules are:
- Club Registration
- Trust Registration
- Society Registration
- Association of Person
- Hindu Undivided Family
- Partnership Firm Registration
- Sole Proprietorship Firm Registration
- Shop and Establishment Act Registration etc.
From the list above we have seen businesses are of two types.
Now we’ll be knowing which business type should be chosen with example.
- Registered businesses: These business registration models should be chosen when the business expansion is on a large level (most probably level) e.g an IT company with clients and dealing in the whole country. So, In this case, we can not go for an Unregistered business model. Here we need uniform rules and regulation, that remains the same throughout the country. So, going with an LLP/Company is the best suitable option.
- Unregistered Businesses: These business registration model should be chosen when our business remains within the limits of the same state or under the jurisdiction of a district or state. e.g a Chemist shop or a restaurant or a cyber cafe etc. These are basic shops where client dealing will be within the limits of a State. Compliances that a business owner has to comply is less as compared to a Company/LLP. So these are best suitable when business is within the local Limit.
In this article, we tried our level best to let users understand which business model can be selected where and its benefits.